Software AG aims to raise APAC revenue contribution

By Benjamin Cher August 26, 2015

Region ripe for growth with company’s new outlook
Expanding Malaysia support centre to provide global support

Software AG aims to raise APAC revenue contribution

ENTERPRISE software company Software AG is looking to increase the revenue contribution from its Asia Pacific markets, with the manufacturing, retail and financial services verticals being key to its aspirations.

The German software powerhouse – founded in 1969 and ranked by Truffle Capital as the second largest software vendor in Germany and the seventh largest in Europe – has been in Asia Pacific for 22 years, with a presence in nine countries.

It recently appointed former Microsoft Corp senior executive Stanimira Koleva (pic above) as the chief operating officer for its Asia Pacific and Japan region.

“Asia Pacific currently brings in 12% of global revenue, with our cloud solutions [revenue from the region] making up 20-25% of cloud solutions revenue globally … we’re punching above our weight,” Koleva said.

“I want to help the company understand the potential of Asia,” she told Digital News Asia (DNA) in Singapore.

In July, the Frankfurt-based company announced that second quarter revenue had grown 10% to €205.6 million (US$236.6 million) from €187.7 million (US$216 million) the year before.

Maintenance revenue hit a new record, growing 14% to hit €103.6 million (US$119.2 million) in a single quarter.

“One year ago, we started to focus on a value-oriented strategy,” chief executive officer Karl-Heinz Streibich said in a statement.

“Our positive business performance over the last three quarters again confirmed both our ability for fast execution and the value potential of our business,” he added.

In March, Software AG announced it would launch a ‘Transformation to the Cloud’ initiative with the objective of helping enterprises identify and implement their optimal cloud adoption strategies.

Koleva believes this will play very nicely in Asia, with its relative lack of legacy software. “I’m a firm believer that Asia has more opportunities than Europe or the United States in terms of new areas of growth.

“Customers are embracing new technologies and embarking on transformations here,” she added.

Asian outlook

There are opportunities for Software AG here because businesses in the region understand the implications of technology and how IT can help drive revenue, according to Koleva.

“Businesses finally understand what technology can … deliver from the business side,” she said.

“IT is much better understood than few years ago when it was viewed as just sitting in the backroom,” she added.

The conversations Software AG is having with customers in Asia Pacific, which have had a clear shift in their objectives, are driving home this point, Koleva argued.

“Previously, customers were all about security, cost management, uninterrupted service – these were their priorities.

“But now, the conversations are much more around how they can make their business more competitive by using technology, and about monetisation and managing complexity,” she said.

Companies in Asia Pacific are also selling their services differently, with technology seen as a key factor in innovating around customer experience.

Ultimately, Software AG’s focus is still on supporting its customers in their business, according to Koleva.

“We want to bridge the gap in supporting business outcomes and enabling IT to deliver real-time transformation,” she said.

Pieces of the puzzle

For its game-plan to boost Asia Pacific’s revenue contribution, some of the key pieces are mobility, small and medium enterprises (SMEs), and the cloud.

“Asia is growing faster than any other region, will have the youngest population, and the biggest share of SMEs – these are opportunities we need to address and capitalise on,” Koleva said.

She acknowledged that the different economies here are growing their cloud adoption at different rates, with some “following global leaders closely.”

“Singapore is a vibrant market, as is Malaysia to an extent – some markets are slightly slower in adopting the cloud, but no doubt it will be an accelerating trend in Asia,” she added.

Social media is also an area of growth earmarked by Software AG. Asia Pacific accounts for half of all social media users globally, according to Social Times.

“We see a lot of social aspects implemented around customer experience, in terms of social listening and how [companies] do sales and marketing,” Koleva said.

Despite the emergence of these new technology trends, Software AG’s traditional business remains strong and will still play a key part, with Koleva saying its real-time systems and large enterprise software implementations are also expected to grow.

To back its growth plans, Software AG will expand and scale up services from its support centre in Malaysia.

“Malaysia has been chosen to provide round-the-clock worldwide support,” Koleva said.

“We currently have about 50 people there and will be looking to hire more, and to expand the centre to scale up to provide the necessary support,” she added.